Health & Family

Carolinas HealthCare CEO Michael Tarwater will retire next year

jwillhelm@charlotteobserver.com

After 34 years at Carolinas HealthCare System, CEO Michael Tarwater announced Tuesday that he’ll retire next June, leaving an organization that has grown from a dreary charity hospital to a sprawling, profitable health care giant that crosses two states and is Mecklenburg County’s largest employer.

During Tarwater’s Charlotte career, the nonprofit health care system ballooned from 5,700 employees to 60,000 across 40 hospitals and 900 health care locations. It grew from $94 million in annual net revenue to $8.7 billion last year. It has investments of about $3 billion and paid Tarwater $5.3 million in total compensation last year.

“The next CEO is being handed a very healthy organization,” said Edward Brown, chairman of the Carolinas HealthCare board of commissioners.

The board will hire an executive search firm to help find Tarwater’s replacement. “We would like him to be here forever,” Brown said. “Our goal is to find the next Michael or Michelle Tarwater. … We want to make sure that the legacy Mike has created here continues.

“Because of Michael’s belief that who you are and where you live should not determine the kind of care you receive, everyone in this region is now blessed with world-class health care right here at home.”

Tarwater, 61, who joined the system in 1981 and became chief executive officer in 2002, said he and his wife, Ann, have been thinking about retirement “for a long time.” His current employment contract expires June 30, 2016, and by announcing his plans to leave a year in advance, Tarwater said he wanted to give the board plenty of time for an orderly transition.

“CEO succession is one of the most important things a board can do,” Tarwater said at the regular quarterly board meeting. “There will be no goodbyes today, we still have lots to do. … It’s just shocking how fast 34 years go by.”

Tarwater shared his announcement with system employees in an email that said, in part: “I will be ready and willing to help with a smooth transition next summer, but for now I want you to know that I am completely dedicated to leading our team forward and am hard at work doing just that.”

Brown said the board’s compensation committee, which will serve as the search committee, will consider in-house candidates for the CEO position as well as outside candidates, but he didn’t name names.

A potential in-house candidate is Dr. Roger Ray, who last fall was promoted from chief medical officer to chief physician executive, taking on extra duties and reporting directly to Tarwater.

Joseph Piemont, who might have been a potential successor, was notified recently that his position of chief operating officer was eliminated, and he left the system at the end of May. During a closed session in April, the board considered Piemont’s “qualifications and performance … as a potential successor” to Tarwater, according to minutes of that session. Also at that meeting, the minutes say, the board discussed termination dates and employment agreements for other senior executives and “discussed potential successors” for Tarwater.

Tarwater’s accomplishments are widely recognized. Jim Palermo, a retired Bank of America executive and past chairman of the board of Presbyterian Healthcare in Charlotte, cited the recent addition of Levine Cancer Institute, with its research programs and leadership by Dr. Derek Raghavan, as an example of advances under Tarwater’s leadership.

“He has done a great job building a spectacular organization and helped put Charlotte health care on the map,” said Palermo, who now lives in Boone.

Former Carolinas HealthCare board Chairman Jim Hynes, who worked with Tarwater for 20 years, said, “No one has ever done it better than Michael Tarwater. … We achieved in Charlotte what the Affordable Care Act is trying to achieve (for the country). Namely, that quality health care is available to every citizen.”

Hynes said Tarwater “raised the profile” of Carolinas HealthCare by recruiting top talent and managing resources smartly. “I think it’s one of the great health care jobs in America. And I think we’ll have plenty of candidates.”

Tarwater’s announcement came as a surprise at the end of his quarterly message to the board. He recited highlights from the hospital system’s 75 years, including creation of Levine Children’s Hospital and Levine Cancer Institute, where the bone marrow transplant unit has performed 60 procedures in the past year instead of the predicted 20.

“Sometimes what we have here and what we do here is not fully appreciated,” Tarwater said. “But having been here for 34 years and seeing where we started and where we are today ... I can’t take it for granted.”

Garloch: 704-358-5078

Tarwater’s tenure

Achievements during Michael Tarwater’s tenure as CEO of Carolinas HealthCare System:

▪ Opening of Levine Children’s Hospital in 2007.

▪  Designation of Carolinas Medical Center as the Charlotte Campus of the UNC School of Medicine in 2010.

▪  Opening of Levine Cancer Institute in 2012.

▪ Expansion of Carolinas HealthCare System Medical Group to include its current total of 230 practices in 570 care locations. In the past year, 150 physicians were added.

▪ Expansion of virtual care options, such as the virtual intensive care unit in Mint Hill and virtual visits with primary care providers over smartphones, tablets or computers.

Karen Garloch

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